Jan Chutka

Bio: Jan Chutka is an academic researcher from University of Žilina. The author has contributed to research in topics: Earnings & Intrinsic value (finance). The author has an hindex of 3, co-authored 7 publications receiving 25 citations.

Detecting earnings manipulation and fraudulent financial reporting in Slovakia

Abstract: Research background: Misleading financial reporting has a negative impact on all stakeholders since financial records are the primary source of information on financial stability, economic activity, and financial health of any company. The handling of them is primarily the responsibility of managers or owners and reasons for doing so may differ. Their common denominator is the artificial creation of information asymmetry to get different types of benefits. It is, therefore, logical that the issue of detecting opportunistic earnings management comes to the fore. Purpose of the article: The purpose of the study is to create a discriminant model of the detection of earnings manipulators in the conditions of the Slovak economy. Methods: We used the discriminant analysis to create a model to identify fraudulent companies, based on the real data on companies that were convicted from misleading financial reporting in connection with tax fraud in the years 2009?2018. The model is inspired by the Beneish model, which is one of the most applied fraud detection methods at all. Findings & Value added: In order to achieve more accurate detection results, we extended the original model by taking into account the values of indicators from three consecutive years, i.e. by taking into account the development of the potential tendency of companies to be involved in opportunistic earnings management. Our model correctly identified 86.4% of fraudulent companies and overall reaches 84.1% classification ability. Both models were applied on empirical data on 1,900 Slovak companies from the years 2016?2018, while their overlap was 32.7% for fraudulent companies and 38.4% for non-fraud companies. This is a very useful result, as the application of both models rein-forces the results obtained and the identical classification of the company into fraudulent indicates that the manipulation of earnings occurs with a high probability.

Usage of P/E earning models as a tool for valuation of shares in condition of global market

Abstract: With the rapid development of computational technology, non-traditional mathematical and statistical methods have also parallely developed to help simplify and accelerate the computation of certain tasks, or even to solve problems that are usually unsolvable. The aim of this paper is to get closer to the P/E earning models and briefly summarize their calculation and usage options. In the first part of our paper we briefly worked out the theoretical basis of these models. Furthermore, we focused on a detailed description of their calculation and use in calculating the value of shares. In the second part of the work we focused on the application of the calculation of the selected P / E model to Apple inc. in the course of 2018 and compared the data obtained with another instrument to identify the intrinsic value of the action. In the last part we focused on the interpretation and summary of the results of the application. We consider the greatest added value of our contribution to be a theoretical comparison of different types of calculation and deeper application of the selected model to real market prices of Apple inc. with the interpretation of the results obtained. We can conclude that the aim we have set is met and we believe that our article will be a valuable addition to the issue in this area.

Company bankruptcy and its prediction in conditions of globalization

Abstract: The internationalisation and globalisation of today’s world, especially in business, brings whole new range of opportunities, challenges and also many kinds of risks. Today´s global market in process of globalization offers many different ways of doing business and also whole new ranges of methods how to analyse optimize and also minimize it´s risks. The issue of bankruptcy models is still relevant given by the high competition in the markets and the increasingly frequent crises. Not only in the world, but also in our country, we can see a huge number of bankruptcies of businesses. If the company wants to thrive and successfully compete in the market environment, it should conduct a regular financial analysis of its activities, evaluate successes and failures, and use the results obtained to make strategic decisions about future business development. The aim of the article is to examine the possibilities of predicting the bankruptcy of companies and describe their individual procedures. In the first part of the paper we defined the terms such as insolvency, decline of company and bankruptcy. We continue with a brief overview of the development of bankruptcy models from the first attempts to modern practices. We have described and defined each model in detail, described its specifics, and described the calculation procedure. The biggest added value of this paper is a comprehensive elaboration of an overview of the possibilities of predicting company manrots through bankruptcy models. We can say that the goal of the post has been fulfilled.

Normality and Its Verification as a Basic Prerequisite for the Application of VaR

Abstract: If we start to deal with the topics of investing or trading in the financial markets, sooner or later we will encounter the topic of risk. Risk is one of the basic input variables in assessing the suitability and profitability of an investment and therefore there are a number of procedures and methods for its quantification. In our article, we address the issue of portfolio risk quantification through the VaR method and verification of its basic assumption, namely the normal distribution of values. The aim of the article is to compile an overview of procedures and methods for verifying the normal distribution and compare their specifics. In the first chapter of our paper, we focused on the definition of risk, its types. The second chapter focuses on methods of risk quantification and description of individual methods. In the third chapter, we will describe in detail the possibilities of verifying the normality of the distribution of values. In the last chapter, we will briefly interpret the information obtained and identified the advantages, disadvantages and other specifics of individual methods of verifying the normal distribution. We consider the aim of the article to be fulfilled and we believe that it will be a valuable contribution in this area of research.

Does the life cycle affect earnings management and bankruptcy

Abstract: Research background: Deteriorating economic conditions and a negative outlook increase the pressure on financial management and the need to show high financial performance. According to Positive Accounting Theory, the growing risk of bankruptcy is associated with the phenomenon of earnings management. Bankruptcy risk and the quality of reported profits, along with other aspects of financial performance, vary throughout the company's life cycle. Nevertheless, these factors or their interactions are investigated only to a very small extent. Purpose of the article: The aim of this study is to clarify the impact of corporate life cycle and bankruptcy on earnings management, in order to describe behaviour of companies at different stages of corporate life cycle. Methods: A hierarchical mixed model with a random time and industry effect was chosen as appropriate because it allows the investigation of multilevel data that is not independent. The sample covers the financial indicators of more than 33,000 Central European companies from 2015–2019. The non-sequential Dickinson model, company age, and three models of accrual earnings management were used as proxies for the company's life cycle and quality of reported profit. Findings & value added: Earnings management and bankruptcy risk have a U-shape, indicating that financially distressed firms reduce reported accounting profit at the Introduction, Decline and, to a lesser extent, at the Growth stage. Slovak and Czech companies manipulate profits to a similar extent, Hungarian companies increase accounting profit to a greatest extent than the surveyed countries by controlling bankruptcy — life cycle effect; however, the variability of accounting manipulations across industries has not been demonstrated. These findings imply that start-ups and declining businesses provide crooked financial statements to obtain more favourable debt covenants, and estimating discretionary accruals using life-cycle subsamples can improve the predictive power of accrual earnings management models.

The Impact of Tax Gap on Macroeconomic Stability: Assessment Using Panel VEC Approach

Abstract: Imperfect tax legislation, high levels of corruption, and shadow economy lead to the deterioration of macroeconomic situation and economic imbalances in the countries. The state’s actual tax revenues’ inconsistency to its potential opportunities becomes the most acute problem for many countries. These processes cause a reduction in budget revenues due to the formation of tax gaps. The research aims to establish the causal links between tax gaps in the main types of taxes and the macroeconomic stability level. A comparative analysis of the theoretical basis for assessing the macroeconomic stability shows that to the greatest extent the requirement to ensure the reliable comparisons of different countries and achieve the main goals of a stabilization policy is possible using the concept of the macroeconomic stability pentagon. The article considers the basic version of this concept (developed by G. Kolodko) and its modifications. The Received: April, 2020 1st Revision: February, 2021 Accepted: March, 2021 DOI: 10.14254/20718330.2021/14-1/10 Journal of International Studies S ci en ti fi c P a pe rs © Foundation of International Studies, 2021 © CSR, 2021 Journal of International Studies Vol.14, No.1, 2021 140 authors have found that taxpayers often resort to various understatement schemes of their VAT and customs duties out of all indirect taxes. The volume of tax gaps for value added tax is calculated in the research. An empirical study on the causal relationships of tax gaps on value added tax and macroeconomic stability is carried out in the following logical sequence: determining the order of series integration using single root tests (ADF, IPS, LLC); evaluation of series cointegration by means of panel tests (Pedroni and Kao), determination of the strength and direction of the causal relationship between the series based on a dynamic approach (VEC model). The findings on the volume of tax gaps by major types of taxes and their causal links with the macroeconomic stability level may become targets for the organization’s legal regulation over paying taxes to the state budget.

Does the efficiency of working capital management affect a firm’s financial distress? Evidence from UAE

Abstract: Purpose This study aims to explore the relative efficiency of the working capital management (WCM) for Emirati firms before and during the coronavirus crisis. Next, this study explores the potential impact of WCM on the likelihood of financial distress. Design/methodology/approach A data envelopment analysis (DEA) was applied to assess the relative efficiency of the WCM. This study uses the emerging market Z-score model to predict the likelihood of financial distress. The logistic regression was applied to investigate the impact of the efficiency of WCM on firms’ financial distress. Findings The results of this study model showed a negative and significant influence of the efficiency of WCM on firms’ financial distress likelihood. Practical implications The findings have important implications for many stakeholders, including decision makers, WC managers, financiers, investors, financial consultants, researchers and others, in increasing their awareness of firms’ WCM performance before and during the crisis. Further, the results could have implications for trading strategies as investors seek attractive economic gains from their investment in firms that care about WCM. Social implications The implications of WCM performance on social interests would cause firms’ decision makers to operate efficiently and achieve the best practices to minimise the probability of firms' financial distress. Originality/value This study advances a novel contribution to the literature by introducing a novel model to assess WCM based on DEA technology.

The choice of methodological approaches to the estimation ofenterprise value in terms of management system goals

Abstract: The purpose of this article is to study the existing methodological approaches to the evaluation of the enterprise in terms of their advantages and disadvantages in practical use and the addition of new quantitative indicators that will increase the level of information support of administrative decisions on the questions of value. There has been conducted the comparison of the current methodological approaches to the analysis of the enterprise value based on the generalization of scientific works. There has been defined the role of the evaluation of enterprises in the general system of the value characteristics management of the enterprise.

Creative accounting as an apparatus for reporting profits in agribusiness

Abstract: The economic results of a company are an important tool for many entities, e.g., for internal entities as well as for external entities. As the economic results of a company are often the only source of information that informs the company’s partners about the managerial activities of their company, it is necessary to present these economic results using real numbers. However, companies prefer to achieve better results by applying the principles of creative accounting, which leads to improved economic values being shown to be achieved during an accounting period. The purpose of this article is to apply models that have been developed to detect creative accounting, which occurs under conditions that help enterprises to adjust their financial statements and tax bases and involves using creative accounting techniques to become competitive or to be able to take advantage of deductions. These models were applied to the Slovak Republic’s agriculture, forestry, and fishing sector (sector A), which is highly affected by earnings manipulation. This article provides a numerical expression of companies, which were previously, with some probability level, involved in conducting financial statement manipulation. Subsequently, the results that were obtained have been displayed using receiver operating characteristic (ROC) curves. The outputs of the analysis show that a large proportion of the companies in this sector tend to use creative accounting, which is not only harmful for entrepreneurs and their business partners in sector A, but also for the Slovak Republic at large, as the Slovak government cannot determine whether the reported accounting results reflect a company’s real financial situation.